Banks were also weak, with Westpac down 1.7 per cent at $25.75 and Commonwealth Bank down 1.2 per cent at $72.18.
APRA awarded digital-only Volt Bank an unrestricted banking licence, providing a green light for the start-up to gather deposits and delivering it a leg-up among the group of new banks seeking to compete against the big four.
Other weak performers included Automotive Holdings, down 4.2 per cent at $1.49, Emeco Holdings, down 3.1 per cent at $2.47, and Pact Group, down 3.6 per cent at $3.73.
The market was dissatisfied with a trading update from construction materials and services provider Wagners, which dropped 8.4 per cent to $2.73.
Aristocrat Leisure shares were up 1.4 per cent at $24.64 after UBS put out a ‘buy’ rating on the firm with a 12-month target price of $34. The analysts said Aristocrat’s online social casino business grew by 15 per cent in the three months ended December, which beat UBS’ forecast and market growth of 11 per cent.
What moved the market
Private health insurance
Morgan Stanley downgraded earnings estimates for the sector, by 15 per cent for Medibank Private and 8 per cent for NIB, citing 2019 as a fifth consecutive year of lower year-on-year approved insurance premium increases. Both major parties in this year’s federal election are focused on delivering improved affordability to customers. “As such, we now see a 2 per cent cap [for] two years as the most likely outcome,” said Morgan Stanley. Medibank Private traded at $2.63 and NIB traded at $5.34 on Tuesday.
Sterling traded at $US1.29 against the US dollar as currency markets continued to weigh up the array of options still on the table for Britain as it heads toward a March 29 deadline to exit the European Union. Capital Economics said that the probability that the UK will not leave the EU has risen to 80 per cent, from 60 per cent in early January after last week’s resounding parliamentary rejection of Prime Minister Theresa May’s Brexit deal. “With the financial markets now largely pricing in an extension of Article 50 as the next twist in the Brexit saga, any short-term upside for sterling may be limited,” it added.
Gold prices held steady on Tuesday after slipping to their lowest level in almost a month on Monday. Spot gold was mostly unchanged at $US1,279.61 an ounce, while US gold futures fell 0.3 per cent to $US1,278.90 per ounce. Tuesday’s prices were supported by concerns over a slowdown in global economic growth and uncertainty around Brexit, although a firm dollar pressured the safe-haven metal, Reuters reported.
South Korea’s economy expanded at the fastest pace in three quarters in the last three months of 2018 owing to a jump in government spending, Reuters reported. The Bank of Korea said that gross domestic product grew at a seasonally-adjusted 1 per cent in the fourth quarter compared to the previous quarter. For 2018 as a whole, the economy grew by 2.7 per cent, which was the slowest expansion in six years but met central bank forecasts. The South Korean won was trading at 1,130 to the US dollar following the GDP report.
Sims Metal Management
UBS downgraded Sims Metal Management to ‘sell’ from ‘neutral’ on Tuesday, while also reducing its 12-month price rating from $12.50 to $8.50. Analyst James Brennan-Chong says the market has yet to “digest” the impact of China banning all scrap metal by 2020, a move he predicts will impact Sims’ earnings forecast as the world’s largest iron and steel scrap provider. He also believes Sims Metal is in an earnings downgrade cycle, citing the fact that although overall volumes for the half year were up 3.3 per cent year-on-year (excluding SA Recycling), earnings before interest and taxes (EBIT) declined 12.2 per cent year-on-year as trading conditions for ferrous & non-ferrous metals worsened. Sims shares closed at $9.20.